Tuesday, December 12, 2017

[Bitcoin] has been given some sense of legitimacy by the CBOE. So clearly it has given some legitimacy. But when they begin to pay taxes on it, when it ceases to be an avenue for avoiding taxes, when it ceases to be a place where drug dealers are trading and making transactions, then I'll be interested. I'd much rather own steel, I'd much rather own land, I'd much rather own ships. Bitcoin is the modern day Tulip Bulb mania. I will let others trade it, I won't trade it.

Monday, November 20, 2017

"The end of the bull market in bonds came in October last year. Rates have been rising for over a year now. Volume is coming on the down side. That is a material difference.Clearly I don’t want to own the longer end of the curve. You will not want to own it for many years in the future. Probably two decades."

Stock market correction within next three years could help Bond bulls for a short time.

"We will get a material bear market in equities in the next three years. And you will wish you went to hide in the bond market for some small amount of time.At this point in time, I’m not paying attention to the diversification element. Do I want to own bonds now? The answer is no.”

Monday, November 13, 2017

"You may get another dollar or 2 upfront in the front months just because of the confusion. But in the long run, this is terribly detrimental to crude oil prices. Over the weekend, it had barely moved, and I thought that was fascinating that crude oil didn't move much at all. If this had occurred five years ago, crude oil would have been $5, $6, $7, $8, $9 higher in the course of two days. Instead it took a $2 or $3 barrel higher and it seems to be stalling.Is Saudi Arabia losing its position of authority? Absolutely. The game has changed dramatically."

Tuesday, November 7, 2017

With the markets continuing to make new all time highs, many investors are cheering but Dennis Gartman is not one of the stock market bull cheerleaders,

"....We fear that we are about to enter that violent… and ending… rush to the upside that has ended so many great bull markets of the past. At this point, the buying becomes manic and prices head skyward. Speculation is the order of the day, not investment and when such periods have erupted in the past prices have gone parabolic until such time as the last bears have been brought to heel and the public has thrown investment caution to the wind. We’re there now; this may become wild."

Monday, October 16, 2017

"The monetary authorities are all still remaining expansionary. Gold has been rallying in dollar terms. It has been a bull market since December. And it is still a bull market. The last rally took us from $1,200 to $1,370. And the fact that we are now below $1,300 is relatively inconsequential.If you are not long, you should use this weakness we have had in the past two weeks to be a buyer, no question.Gold will be demonstrably higher then where it is right now. $1,400 is a reasonable expectation. I am not a gold bug. I don't believe the world is going to come to an end. I don't think you own gold because you think governments are going to be collapsing around the world."

On the potential for upcoming Fed Rate Hikes "[Rate Hikes] is going to take five or six years. This is not something that will occur overnight."

Thursday, October 12, 2017

"I don't care which valuation you put upon it — price to earnings, price to book value, margin usage, the market is extremely high, as I have said before. It is a bull market, you are to be long, but you cant be very long. These things will end. And it will end badly when it does end. It has been a protracted bull market, that I think is extremely overextended."

Monday, September 11, 2017

The Bull Market continues....
"The global bull market can absorb the seriousness of Hurricanes Harvey and Irma; it can absorb the continued threats from North Korea; it can absorb the threats to the very veracity of the European Union as the citizens of Catalonia are prepared to separate in a quiet civil “war” from the rest of Spain. It absorbs the high valuations to which share prices have advanced relative to book value; P/e multiples are high and rising; price:book value ratios are as extended as we’ve seen them since the late 90’s and the early first years of this century.Government borrowing ratios compared to GDP estimates are historically wide; wage pressures are being felt everywhere and margin usage is egregiously extended… and yet prices move higher.So, we are left with the singular notion that this does indeed remain a bull market, but risking abject, disdainful redundancy, we shall again iterate that we are to err bullishly of equities in global terms but we needn’t be… nor should we be… aggressively so. Modestly long; tenuously long; deer-in-the-headlights fearfully long…. That’s what we are or should be as of the moment and that’s all we shall advocate."

Thursday, September 7, 2017

You have refineries that are being closed and not going to be open for a few days. If you had asked me a week and half ago if this would have been a disastrous hurricane, I would have thought no.The fact that it stayed, continued, blew up and stayed for four or five days, this could be weeks, perhaps even months before we return to any sense of normalcy. You could have gasoline prices 25 to 35 cents higher for retail in a very short span of time. So this is hurricane season. Hurricane season hits peak September 15. Let's hope that we can get through September 15.

Monday, August 28, 2017

"This is going to be a short-term event. Obviously there are going to be repercussions. What has happened, however ... it's put downward pressure on crude oil, which is confusing a lot of people. But when you think about it, the demand for crude is going to decline. At the same time, refiners are going to be curtailed, so you're going to see a shortage of gasoline and distillate. Gasoline futures are strong. Distillate futures are strong. But they're only strong in the very near buys."

Monday, August 21, 2017

"It is a punter's dream. I give them credit for that, but it is something that I will absolutely stay away from, have stayed away from it, didn't understand it to begin with, don't understand it now.What bothers me is that something that can move 5, 10, 15, 18 percent in the course of the day for what's supposed to be a pricing mechanism. How can you buy a house? How can you buy a car? How can you buy Starbucks with bitcoin when the price is going to fluctuate as [dramatically] as it has? This looks to me, you can take the chart of Bitcoin and apply the Bitcoin chart to the Tulip mania of the 15th century.My problem with Bitcoin also is originally, the concept behind bitcoin was it was supposed to be a finite number of currencies. That is it would be better than the dollar or euro because those are infinite and they can be created by Central Banks out of air. But the problem is now there 1059 crypto currencies all of which can be increased. There will probably be 2000 crypto currencies. The finite nature of crypto currencies universe has become an infinite nature. We'll walk in one day and this will all have ended. And it will end very badly." - CNBC

"Mr. Howard Marks of Oaktree Capital who’s gone on record to suggest that the “perpetual motion machine” that everyone has come to believe the stock market to be to the upside has ground to a halt.

We are indeed fearful… very… that this wondrous bull market that began in the spring of ‘09 has come to an end and we do not make this statement lightly for we know the damage that can be done to an already damaged reputation if this statement proves to be wrong.But the monetary authorities who’ve sponsored this bull market with their massive injections of money borne out of the ether have begun the process of either standing down from that monetary expansionism or have at the very least chosen to slow the process… either of which shall be deleterious to equity."

Friday, August 18, 2017

After seeing some decent strength in the markets recently, stocks moved sharply lower over the course of the trading day yesterday Thursday. The major averages ended the session at their worst levels of the day. The Dow tumbled 274 points or 1.2 percent to 21,750.73, the Nasdaq plummeted 123 points or 1.9 percent to 6,211.91 and the S&P 500 slumped 38.10 points 1.5 percent to 2,430.01. The S&P 500 dropped to its lowest closing level in over a month. Dennis Gartman recently warned that the bull market in stocks had ended. His latest update is similarly bearish of the markets."STOCKS HAVE AGAIN FALLEN UNANIMOUSLY…AND MATERIALLY in global terms and what had heretofore been a rare circumstance when all ten markets incumbent in our International Index have fallen has now become commonplace for this happened one week ago today and it has happened yet again. Indeed, in the course of the past week, we’ve now seen three such “unanimous” days, for on Tuesday stocks “unanimously” rose. Such “unanimous” days had, until this week, been a truly rare event and had in the past marked major turning points in the market, marking final periods of exhaustion to the upside or to the down. It is interesting that with all of these violent price movements, stocks in global terms as measured by our Index have move barely at all, for last week our Index was 11,168 and this morning it is 11,226, or 0.5% higher.

We do not and we have not “trusted” equity valuations for quite some long while, believing that the markets individually and collectively have gone to levels that are not justified by earnings or economic fundamentals. The one fundamental that has been at work over the past several years has been the monetary expansions by the main monetary authorities: the Fed; the ECB and the Bank of Japan. Those authorities are now preparing to end their experiments with QE, and if they not prepared to end them they are at least prepared to slow down the seriousness of their expansions. This we find disconcerting.

Further, as has been the historic case, equity markets do indeed turn for the better long before economies move upward and out of recessions, always fueled by monetary expansion. Also, they turn down long before those same economies fall into recessions and indeed are usually moving lower as those economies are moving to their best levels as capital is demanded for plant and equipment. That capital must be taken from somewhere and that “somewhere” is the equity market… especially if the monetary authorities are becoming “stingy” with monetary expansion. That is where we are today; the economies are doing rather well… not exceedingly so; just nicely, pleasantly, “plowhorsedly” so… AND the monetary authorities are preparing to tighten policy.

However, the fact that we’ve had three “unanimous” days in a week gives us very great… bearish… pause. The fact that corporate debt here in the US has risen to all-time highs gives us pause. The fact that corporate tax receipts have been moving lower, not higher, over the past many months gives us pause, for we’ve learned simply that corporations pay taxes only on “real profits” rather than upon some of the “engineered” profits they report to shareholders and to analysts alike. We are gravely concerned that the numbers of delinquent auto loans… loans that have been extended over the years from three years, to four and to five and six!... are high and are rising. We are concerned about the stunning levels of college/university debts weighing down upon our nation’s young voters who are swayed to the politics of the Left by demagogues who promise loan forgiveness and further free college; but most of all we are concerned that the “punch bowl” of monetary expansion is about to be taken away, or shall at the very least be threatened or slowed.

Finally, we cannot help but note once again that recent conversations with the public about their “stock holdings” cause us very real concerns, for the public truly believes that in holding mutual funds and/or ETFs that they’ve little if any exposure to the vagaries of the stock market. We had that conversation last week with our “trainer” and friends in the business have written to us this week of the same conversations they’ve had with doctors, store clerks, plumbers, and teachers et al. The public is convinced that their holdings are insured against market risk and/or that they’ve no risk whatsoever. The public is wrong and therein is our greatest fear.

In our recommendations we are long of the “bluer” chip indices while we are short of the “higher tech/broader” indices instead; that is we are long of the S&P and we are short of the NASDAQ. The more aggressive among us might wish to be long of the Dow Industrials while short of the Russell 2000, but our positioning is that of an incipient bear market. For months, the tape has been “painted” as the broad market has weakened even as the Dow has gone on to new highs. This will continue and those not involved in this manner should become involved today.

Finally, this may well be one of the most important days in the future of the equity markets for a very long while, for should the markets trade better and then close lower …and close hard upon their lows for the week… it will be an ominous technical sign. The great Richard Dennis of past trading fame always taught his “students,” … the famed “Turtles” as they were called… to sell markets closing their weeks on multi-week lows. It was the singular rule that made him wealthy and it is a rule we always take very seriously to heart. Thus, we shall watch today’s action with much heightened interest… more perhaps than at any time in many, many months. the futures are trading higher as we write, but a lower close today shall not be pretty."via zerohedge

Monday, August 14, 2017

"We have been in a bull market for almost two years, its just been so unrecognizable. I think Gold is about to break out on the upside strongly because of inflationary pressures.One never knows when geopolitical risks will arise. One never knows when something untoward will happen economically. So yes, you should have some part of your portfolio in [gold]. I think you should have a tad bit more than 5 or 10% at this point. The stock market looks a little vulnerable. The geopolitical circumstances are getting worse and worse. So, I think that you probably need to bring that up to 10 to 15%, rather than 5 to 10.”

Wednesday, August 9, 2017

"You had a bear market in Iron and the Steel market. But now, base metals across the board have turned to the better. I think that's from the better economic environment in the US and overseas in China.I think you have to be impressed that Steel and Iron prices have been doing as well as they are. I would suspect that any sort of weakness, one should be a buyer. I think the trend in Steel, Iron Ore, and even shipping values are for the better."

Monday, August 7, 2017

"Until about three weeks ago, I had been manifestly bearish of crude oil for a long period of time. Finally I have to tell myself, maybe higher prices lie ahead. Any weakness [should be bought].OPEC is clearly worried about getting crude oil above $50 a barrel. They need to keep it above $50 and keep it there.The big problem that OPEC is, Nigeria, Libya and Angola have been left out of the OPEC quota system. And both Nigeria and Libya have been extraordinary in increasing production to the dismay of the Emirates and Saudis. In their next meeting, they have to find some way to find Nigeria and Libya to be put back in the quota system. Whether Nigeria and Libya will allow themselves to be put back in the quota is another question. Can they do it? I don't know."via bloomberg

Wednesday, August 2, 2017

"I think this is the first or second year of the commodity bull market. The Grains stopped making new lows, Gold stopped making new lows almost two years ago. Crude Oil has begun to move higher. Copper stopped making new lows. If you look at the broader indexes such as the CRB index, it made its low two and half years ago.""I like the Gold market, I like the Copper market, I like the Grain market. Something is happening there. It is not deflationary, it is Inflation."

Tuesday, August 1, 2017

Click here if the above video does not play"Somethings going on. The conversation was constantly about deflation. Instead, the commodities markets are starting to tell you that perhaps there's incipient inflation taking place."

"Money is moving out of the capital market and into real plants and equipment. You may be seeing an end of the movement into the FANGS. Maybe that's whats going on."

Monday, July 24, 2017

"We are at a level where commodities are unbelievably inexpensive relative to the S&P 500, levels we have not seen since the peak of equities prices in the dotcom era [and in] 1971 when stock prices were high and commodity prices were very low. The broad commodity indexes have all made their lows, and yet deflation seems to be the talk of the day, rather than inflation.""One should be a buyer of Commodities and one should tend to be on balance a seller of stocks."via CNBC

Tuesday, July 18, 2017

It is reasonably impressive that gold is trading better even as the grains are weak, but perhaps the real strength is because the dollar is generally…weaker and that shall tend on balance to put a bid into gold, all things being otherwise equal.

We are even more impressed that euro-denominated gold is trading to €1075/oz. and is now trading upward through an important intra-day moving average it has not traded upward through since early June.

Monday, July 17, 2017

"I love to talk about bitcoin. The only people who believe in it are the millennials. I understand that; they've grown up with this notion of bitcoin. But I find bitcoin to be one of the most ludicrous ideas I’ve ever come across.Don't get me wrong; the idea behind it―the blockchain technology behind it―is bloody brilliant. The block chain methodology will change the manner in which we trade stocks, bonds, currencies and gold for years into the future. It will change the manner in which trading takes place.But does bitcoin have any rationality behind it whatsoever? The answer, in my opinion, is no. It’s comically overpriced, comically close to a bubble, and we've seen bitcoin's high. I don't think there's any question that a month and a half ago we saw the high made in bitcoin.What's amusing to me is that the believers in bitcoin say there's a fixed and finite supply that cannot be increased. Sure, maybe bitcoin supply can't be increased, but there are now over 100 other cryptocurrencies, which effectively increases the supply of cryptocurrencies.And quite honestly, if you really think that bitcoin, once its last bit has been mined, is not going to reopen for further increases in supply, you're naïve; of course it will.So has bitcoin supplanted gold at the margin? No question. For the millennials, bitcoin makes sense to them. Gold seems senseless; they don't get it. But the bubble has burst in the bitcoin phenomenon."via http://www.etf.com/sections/features-and-news/3-investing-legends-bitcoin?nopaging=1

Thursday, July 13, 2017

Dennis Gartman notes the now might be an appropriate time to be cover any short oil positions due to the narrowing of the cantango between WTI and Brent."ENERGY PRICES HAVE FALLEN FROM THEIR BEST LEVELS and have done so despite the very bullish numbers on inventories of crude and products reported out yesterday by the EIA. However, firstly we have to report that crude oil production in Venezuela continues to dwindle as OPEC reported yesterday that production there has fallen to 1.93 million bpd. This has happened despite the fact that all of the other members of OPEC, in aggregate, produced more crude oil in June than they had in May.""....at $2.33/barrel the contango has narrowed for the week, for it was $2.61/barrel one week ago this morning. For that reason, we are going to move to the sidelines in crude oil, covering our short position..."

“I don’t think there’s any question bitcoin saw its high a month ago and the fact that ethereum had its blow up last week shows you how tenuous are the underpinnings of that market.”“The reason for bitcoin to have been created was ostensibly to be used as a purchasing mechanism, like dollars; but if something is able to move 15-20% in the course of a day, how can that possibly be used as a purchasing mechanism?” “I think it’s the most comical, ludicrous, and silly notion to come down the pipe since tulip bulb mania of the 15th century.”

Tuesday, July 11, 2017

Crude Oil"Given the fact that crude has been under some very real pressure over the last month or so, you have to be reasonably impressed that gold has, at least, held its own."Gold vs Oil"I hesitate to say there’s any great short-term correlation between the two. On balance, gold whether it is in dollar, euro or yen terms, I think gold wants to move quietly higher."Gold's price resilience in 2017“The psychology is overwhelmingly bearish and yet prices are not making new lows, that is worthy of note."via kitco

Wednesday, July 5, 2017

Should you buy or sell crude oil. Here is what Dennis Gartman thinks....

"CRUDE OIL PRICES CONTINUE TO ADVANCE and have now risen for 8 or 9 days in a row, depending upon when one has marked the close.

We have maintained that the “bounce” would take crude back to The Box marking the 50-62% retracement in nearby WTI crude to somewhere between $47.00-$48.15 and for all intents that was satisfied yesterday when the high of $47.07.

The time then has come to be short of crude oil once again, and we are certain that we shall be at least as equally scoffed at for selling crude today as we were two weeks ago for urging everyone, everywhere not to be short. This recent increase has, of course, re-ignited the interest of drillers to drill and the contango is still wide enough to encourage drilling and hedging as the one year forward is very nearly $50/barrel."via zerohedge

Tuesday, June 27, 2017

With the Summer Solstice last week on June 21, could that have been an important date? Dennis Gartman thinks so.

"There has been a historical precedent for market turns of consequence to have taken place at or very near to solstices and equinox. We note further that in 1987 stocks peaked one month before the Fall equinox and completed their violent “crash” one month later.The 1976 top and 1978 bottom in the Dow were both within 2 weeks of equinoxes. In 1929… a year of true market ignominy… there was a minor “Crash” on March 25 hard upon the spring equinox and the Dow topped in early September of that year, two weeks before the autumnal equinox, while the London stock market crashed on the 20th of September, precisely on the equinox. History does not always rhyme, but it does tend to have meter. Be prepared. The “meter” is running."

Monday, June 26, 2017

"He[Saudi Arabia's new crown prince, Mohammed bin Salman] understands that crude oil, over the course of the next 20 to 40 years, is going to be a worthless commodity.I'll tell you one thing: in the long run, crude oil is heading egregiously lower.We doubt that demand growth will accelerate sufficiently to break the current downward price momentum. So it may be a black swan for the oil industry itself, but it's a white swan or the economy in general."

Monday, June 12, 2017

The stock markets punished US tech stocks last week, and biggest tech names saw the worst of it. Apple, Alphabet, Microsoft, Facebook and Amazon — lost more than $97.5 billion in market value between the close on Thursday and the close on Friday.

Shares of Apple fell nearly 4 percent on Friday, while the other four companies fell more than 3 percent. However they are near the trend line supports and this may represent a wise buying opportunity.According to Dennis Gartman,

"We have included the chart of the NASDAQ at the lower left of p.1 this morning, noting that the lows on Friday amidst sheer panic selling in the early afternoon took the Index to a trend line that we extend back to the lows of last July, although we show it only into the lows of mid-April of this year. It shall take courage on our part to believe that the bull market is still intact, but in fact it is. Thus, if the NASDAQ were to fall back toward 5675 or so today we shall have to be a buyer, for as Old Turkey would remind us, “After all, this is a bull market.” Further, a drop to 5675 shall only be a 3.8% correction from the peak.

Finally, if the NASDAQ does test those lows, our urge shall be to own banking shares above all else for the banks did amazingly well on Friday, rising smartly even as the FANGSs were collapsing, predicated upon the Fed moving to tighten monetary policy at its meeting this week and thus widening net-interest income for the banks… the real driver of bank earnings. Regional banks, especially, may be best served, with the ETF soaring 3.1% on Friday and breaking out to the upside. Any periods of weakness this week are to be bought."

Monday, June 5, 2017

The boom in the digital currency Bitcoin is extraordinary. Bitcoin has jumped about 150 percent just this year to trade at $2,445.20 on Friday Anyone smart or lucky enough to have bought $1,000 of bitcoins in July 2010, when the price stood at $0.05, would today now have a stash worth approximately $46 million. Here below is what Commodities King - Dennis Gartman makes of Bitcoin.

Tuesday, May 30, 2017

"We stand in awe of the sheer relentless nature of the global bull market. Unlike the parabolic rise by Bitcoin, for example, the trend from the lower left to the upper right in global equity prices is measured… is reasonable… is relentless and is, in the end, majestic in nature. It will stop when it stops and not a moment before. Every time we think that the market is overbought, it consolidates and moves higher.It is interesting then to note that the CNN Fear & Greed Index has been “locked” in recent days a few points either side of 50, where 50 is evenly balanced between the bullish and bearish forces at work. When the Index is below 20 and has turned higher, the market is oversold and due for a rally. When it is above 75 or so and turns down, the market’s over-bought and due for weakness. But at 50 it is neutral… utterly and completely… allowing the trend at hand to obtain a while longer and the trend at hand is clearly a bullish trend.In retrospect we allowed our prosaic, old-guard beliefs in simple things to color our view of the markets; that is, we have tended to err, even when bullish of stocks, to own metals, trains, boats, bearings et al. As always, we’ve wanted to own them when instead we should have understood the disruptive nature of modern technology and should have been buying the things that are either replacing these simple things or are making these simple things better.We shall never be able to step into the pharmaceutical equities for we are not able, nor willing, to make implied bets upon whether a drug in place shall meet FDA approvals or not. We’ve not that expertise, nor shall we ever have it. However, we should be able to ascertain what companies will make mining better; what companies will help run railroads run more efficiently; what high-tech companies will replace crews on ships with autonomy et al. That we have to do; that we shall do. The game has changed and so must we."

Wednesday, May 17, 2017

Is there anything in the investment world less investable than SNAP?This is a company losing millions of dollars/month, whose product is the ability to create funny pictures of friends that can be sent via the net and messages that disappear soon after having been transmitted.This is utter nonsense. This is not a business; this is a time sapping hobby; a diversion; a silly little waste of aggregated time that could be spent “profitably” but which is spent stupidly instead.Although we know that teenagers… and adults who think of themselves as teenagers… love this silly little “app,” but it is simply an app… and a silly one at that.Is anyone with a rational investment horizon and a sense of history of investments surprised by the fact that since having gone public at $24/share SNAP’s shares have gone at best sideways and last evening fell nearly 30% on disappointing sales and “eye-ball” counts.Again, as Herb Stein said, that which cannot continue won’t. SNAP, snapped and the investment world is a bit better place for its having done so. We trust we are clear.

Monday, May 8, 2017

We want very badly to believe that the great bull market that has been extant for as long as it has been… now having finished eight powerful years to the upside here in the US… continues in unabated fashion for the simple truth of the matter is that everyone, everywhere lives better in bull markets. The food tastes better; the music is clearer with sweeter melodies; the women are lovelier and the men are actually handsome. Cinderella lives in bull markets. In bear markets, suddenly the make-up runs; the dresses turn shabby; the bands play off-key and without rhythm and the men and women turn one upon the other. Life turns harshly for the worse.Thus we want truly to believe that the bull market continues but we are beginning to have real doubts. Certainly a correction of some very real magnitude is upon us.We know only this: that when things go awry it is best to cut positions as swiftly as one might. As Jesse Livermore was told by a more senior mentor about a position that he, Livermore… had had in place that was causing him to lose sleep, cut back to a “sleeping” position. We have done that, and even now we find it difficult to doze off for the pain of losing 3% in one week is very real and all too evident.All of that said, we are at a position in the equity, bond and commodity markets where the margin clerks are in control and where rationality takes a seat on the sidelines for a while. The rumors of one or two or several “funds” being forced to liquidate almost certainly will prove not to be rumors but shall prove to be fact either today or over the weekend. More such rumors will develop; some too shall prove to be the truth. The game is changing and so as Sgt. Esterhaus used to say to his men before he sent them out into the mean streets of Chicago on that great television show of years past, “Be careful out there.” So do be careful out there!

Monday, May 1, 2017

People need to understand, if you buy Soy Beans, you buy Beans, you've sold Dollars. You made the bet that the Dollar is going to weaken and you would rather own beans versus the Dollar. If you buy Crude Oil, you have effectively made a bet against the US Dollar. If you bought Gold you really made a bet against the US Dollar. I rather own Gold in currencies that I think are going to fall in value. There will be a time when I will have no interest in Gold in Euro's and Yen terms. For now I think the Yen and Euro will continue to weaken.

Wednesday, April 26, 2017

I trade only for my own account so I think that's important. What I write in my newsletter, is what I am doing. I am up 5 percent up for the year. Do I get things wrong ? Yes absolutely. The important thing to do is, not to stay wrong. And I try not to stay wrong for very long periods of time. The only thing that will take you out of this business is getting something wrong and adding to it, doing more of which is wrong. I have a very simple idiom, lets do more of what has been working and less of what has not. If you do that in life you will succeed, if you do that in investing, you will succeed.

Tuesday, April 25, 2017

Mr. Melenchon has gone out of his way to prove his far-left-of-centre bona fides by announcing that he wishes to increase the marginal tax rate on the wealthy in France violently, and has proposed a rate of 100% on incomes above €400,000, or approximately $425,000 at the current EUR/US$ exchange rate.What is disconcerting is that no one in France is laughing at the stupidity of this proposal and many are actually applauding.

Monday, April 24, 2017

Businesses in the US are actually doing well. If you get out of New York, if you go to Virginia Beach, if you go to Sacramento, if you go to Cleveland, they are Help Wanted signs everywhere. business are actually doing better at the base. And I think that's whats going on with the Stock Market more than anything else. Is it surprising to me ? YesDo I think share prices overvalued ? Yes. Are Price to Earnings multiples extended to the upside ? Yes.What to buy ?I am an old guy, I like simple things in infrastructure and economic growth. Get me steel, I want to own ball bearing manufacturers, cements, I want to own simple things.Why ?We are still building houses, we are still building roads, bridges. We are still going to make things. We still need steel, ball bearings, cements. We shall for the next 500 years.

Wednesday, April 19, 2017

It's still a long term bull market. You should still err on the side of being bullish. Cash at one point should be a wonderful thing to have, but not yet. And there are times when I have gone to cash. Every time I had done it, I wish I had not.We may all find stock prices overpriced and by Price to Earnings multiple they are infact. But nonetheless if you fight the trend it will cost you money. I find it difficult to buy stuff, but you have no choice.via cnbc

Tuesday, April 11, 2017

The President is absolutely wrong. The Chinese are not manipulating their currency downward. If they've done anything, and I've argued this for months and months, the Chinese have been supporting their currency instead.If they are manipulating to weaken their currency, they're doing it 180 degrees in the wrong direction and somehow I don't believe that the Chinese are illogical and that silly when it comes to foreign exchange. They are not currency manipulators as the President would have us believe.What I find interesting is everybody is concerned about the fact that China hold so much of our paper. Let me think, what a great trade, we buy goods from them, we give them paper. That's a great trade in my opinion and I think we are on the stronger side of the question.

Wednesday, April 5, 2017

The most important thing in the world of trading and investing is to not become married to a position. Defending a bad trade is the only thing that shall take you out of this business. There is nothing at all wrong with being wrong, but there is everything wrong with staying wrong.

Monday, April 3, 2017

STOCK PRICES… EVERYWHERE… ARE HIGHER AND SHARPLY SO as all ten of the markets in our International Index have risen. This is a rare event and historically such unanimity amongst our “universe” of markets has marked important panic tops if this has happened after extended bull runs, or has marked important panic lows at the end of extended bear runs. Certainly this is not the latter. We obviously have considered the markets overextended to the upside and have been reticent about buying into them aggressively. As we said the other evening when on CNBC’s “Fast Money,” and as we’ve said countless times here in TGL, this is a bull market and in a bull market one can have only one of three possible positions: Very, aggressively long of equities on balance; pleasantly long of equities on balance or, finally, neutral of equities, and there is no question but that we’ve tended to err upon the latter two positions and “Err” is the proper word here for we have indeed erred.

Those who’ve thrown caution to the investment wind and have remained aggressively long have reaped their rewards and we applaud them for either their tenacity, or their brilliance or their obeisance to the trend. We have been “too cute by half” in fearing a correction that never seems to avail itself.

Given the recent weakness in the CNN Fear & Greed Index we were coming very close to buying equities aggressively, if only had this Index fallen to 20 or below, having been to 85 only a few months ago. It fell to 29 .....… close to 20 but not quite there. It has turned up from there. If that was this indicator’s low it shall be the fifth time in a row that it has made a progressively higher low since late ’14. Previously, going back to late ’14, the lows were very near to 0; then 5 in the autumn of ‘15; then 15 in the first few days of ’16; then 15 in the late autumn of last year and now 29.

We have no choice but to follow the “lead” from the CNN Fear & Greed Index and to be bullish of equities. To make it simple we shall return to our original thesis regarding the Trump Adminisration and defer to the “Mahoning Valley” rather than to Silicon Valley; that is, we’ll buy steel, and coal, and ships, and railroads and ball bearings and cement and weaponry et al, for if the Trump Administration does stand for anything it stands of infrastructure and defense. These things we can count and these things we can count upon. These things are simple being the things that if dropped on your foot shall hurt.

Monday, March 27, 2017

This is the start of at least a 5 percent correction, and perhaps something far worse than that over time. I take this very seriously. This is not just a one off circumstance in the equities market. This has something that has happened across all over the universe of capital markets. I think there's something to the downside that could become quite serious and one should be very careful. If we stop at 5 percent.... Let us hope it's merely a 5-7 percent correction and nothing more than that.We've been saying that we expect a 5 to 10 percent correction. We've been saying that for weeks now. At the end of bull markets, earnings always look great. Earnings don't look bad until you've gone somewhere into an economic downturn. Earnings lag by at least a quarter, and usually by a half, so you're going to get the best earnings right at the peak of economic activity.

Wednesday, March 22, 2017

STOCK PRICES ARE DOWN MARKEDLY AND UNIVERSALLY as every market of the ten markets comprising our International Index has fallen with five of the ten having fallen by more than 1% and with two markets…. Japan’s and Brazil’s… have fallen by more than 2%. Allow us to be quite blunt here and acknowledge that something “broke” in the markets across the board yesterday, and we said in an interview earlier today with CNBC Europe, it is not just that stocks broke to the downside, but that precious metals “broke” to the upside along with bonds, and that the base metals broke to the downside following equities. The psychology of the market has taken a very real and very severe beating and we fear, of a sudden, that something more than a mere long-awaited correction has fallen upon our shoulders.

We would like very much to believe that all we are about to see is the normal… the standard… the again, much-awaited 5-7% correction in equity prices that shall be that proverbial “pause that refreshes.” We would like to believe that imperatively for as we have said before, “Bears don’t eat.” That is, bear markets are ugly; bear markets are depressing; bear markets weigh heavily upon the nation’s and the individual’s psyche and so we want to believe that this shall be something less than the beginning of a bear market and shall indeed by nothing more than the first day or two of a correction. This we truly want to believe, but we fear otherwise.

Time of course only shall tell what is happening or is about to happen. Trend lines cast back months rather than weeks can still hold. The market may reach such severely over-sold levels and may reach them so quickly as to render the market given to a rally. We may see the CNN Fear & Greed Index rush downward toward 15 and turn higher. We may see the clouds part and the sun come out again… but again we fear otherwise.

In our own retirement account yesterday we took very real action to protect ourselves on the downside, for we stepped in early in the session and bought Japanese equities via the Wisdom Tree ETF, DXJ, but within an hour, with the market moving quickly against us, we cast it overboard, taking a small loss in the process. Then as prices continued to deteriorate we actually ventured to the short side of the market, buying bearish derivatives and by 1:00 in the afternoon, doubling those positions and carrying them “home” through the close of trading. This is the first time in a very, very long while we have actually gone short of equities, but it is our intention to become even shorter of them, hoping to sell a bounce that might develop intra-day.Finally, always remember this, that as our old friend Doug Kass reminds us, ‘Risk happens fast.” Perhaps the FBI’s investigation shall stop at Mr. Manafort and maybe even Gen. Flynn and perhaps it shall not go any further. But for the umpteenth time here this morning, we fear otherwise. Discretion being the far better part of trading/investing valor, it is time to take some money off the table.

We are bullish of Japanese shares and have an initial position in place long of the Japanese stocks via ETFs here in the US, but we wish only to be long of those ETFs that hedge away our exposure to a weaker Japanese Yen.Our preferred position then is in DXJ:Wisdom Tree’s currency hedged Japanese ETF. Further, it is our intention to add to this position but not until such time as the “spot” Nikkei closes “materially” above 16,600.

Tuesday, March 21, 2017

No one shall be surprised to read that we have not changed our thesis on gold at this point for we remain bullish of gold in EUR and Yen denominated terms as we have for the past several years, noting once again that gold in EUR terms leads the way higher and is up 9.6% year-to-date while gold in US dollar terms is up 9.2%. Gold in Yen denominated terms is lagging behind the other two prices thus far this year as capital seems intent upon moving out of Europe and to other venues, with Japan being a prime venue thus far, perhaps simply because of the geographical separation of Japan from the political problems attendant to Europe presently and thus keeping the Yen “bid” vs. the EUR. However, we shall suggest that that Gold/Yen’s three year out-performance vs. gold in US dollar terms… unchanged vs. -7.5%… does “trump” the year-to-date figures.As gold has risen in all currency terms in the course of the past several days there is some very real concern that gold mining shares have seriously under-performed. We share that concern for historically the mining shares are leaders to the upside and to the down, thus when we are bullish of gold but see the mining shares lag behind we become openly concerned that something is amiss. Nonetheless, the political confusion that does seem to reign at the moment in Europe generally as elections loom in the Netherlands and France does tend to keep us viewing gold positively.

Monday, March 20, 2017

For the first time in a while, I think you should own commodities in general. You should own gold in dollar terms; you should own gold in euro terms; you should own gold in yen-denominated terms. Gold has started to be a bull market.

Friday, March 17, 2017

Mr. Trump's agenda is bullish for the economy, but not necessarily bullish for stocks. That sounds illogical, but it's not illogical at all.Why do stocks go up before economies come out of a recession? Because at the bottoms—when the monetary authorities become expansionary—that money finds its way into the capital markets, because it isn't needed in plants, equipment and labor.You get that period of time that stocks take off on the upside and the economy continues to dwindle, and everybody wonders how stocks can continue to go up. That's what happens at bottoms.On the other hand, at the tops of economic expansions, when there’s demand for plants and equipment and labor, money has to come from somewhere―especially if the monetary authorities are starting to err on the side of being restrictive rather than expansionary, as the Fed currently is. At that point, money comes out of the capital markets and goes into plants and equipment and labor.Trump's proposals and his agenda are very bullish for the economy. By definition, therefore, it's somewhat bearish for equity prices after this sort of extended rally.

Wednesday, March 15, 2017

We have focused attention for the past year and one half upon the demise of and the unwise handling of the stock in Valeant Pharmaceuticals by the hedge fund community. We never understood the business plan adopted by this company and we never understood the stock’s sky-rocket move higher from ’12-mid’15 when it rose from $40/share to just “north” of $260. It made no sense to us then and when the stock fell from $240/share to $200/share in the early autumn of ’15 we argued then that the “There-is-never-just-one-cockroach” Theory was almost certainly to be in effect and that VRX’ shares were headed toward eventual failure.

When it gapped from $150/share to $120/share we argued again that lower price would prevail and that Mr. Ackman… and others following his lead into the company’s shares… was making a possible careerending decision when he averaged down on the trade. As our old friend, Paul Tudor Jones, has always said, “Losers average losers.” Further, when Mr. Ackman argued for a seat… or seats… on the company’s Board of Directors, thus making it almost impossible to sell his shares without doing even more damage to the company’s stock for sales then had to be made quite public, we argued that this was a truly ill-advised decision on his part and that it would serve only to tell the market that his block of shares remained as over-head supply that eventually shall have to be sold, likely in a forced manner.

Yesterday, Mr. Ackman announced that he had indeed sold his remaining shares in VRX and has asked to have himself and an associate released from their Board seats. This was a very public capitulation on his part and quite honestly we feel very sad for him to have fallen this hard and this publically for no one deserves that sort of ignominy. Nonetheless, it was his selling, we are certain, that drove the stock down in the course of the past two weeks from $17/share to under $12. Now he is gone and the market knows that his shares have been distributed into the stronger… or at least broader… hands of other investors. There is no longer a huge block of shares dangling like the sword of Damocles over the market’s head.

Ackman was not alone in this trade. Other skillful and formerly wise hedge fund managers followed him into Valeant and followed him all the way down. But we are rather convinced that those “hedgies” are out now that Mr. Ackman is out so perhaps a “punt” from the long side is reasonable. The coast is now clearer. Lessons have been learned… we hope.Gartman warns in 2016 that Bill Ackman averaging down in Valeant could end badly

Tuesday, March 14, 2017

That 30-plus-year bull market, which began in August 1982, is over. It's hard to believe, but I was there at the beginning. I was there at the end of the previous bear market, and I was there at the beginning of this long, protracted bull market in bonds (or the long, protracted decline in interest rates). It's hard for me to make people remember, but in 1982, the 30-year bond had a coupon of 14.75%, and you couldn't give them away at the time. It was astonishing how bad the psychology was.But since 1982, we've been in a 30-plus-year bull market; that bull market has ended. The trend is for higher interest rates, not lower. But you must also remember the bond market tends to move in multidecade, long-term trends. If we're in for 20, 30 or 40 years of higher rates, for the first 15 or 20 years, we'll see rates go up very slowly, and very marginally.It's at the end of this next bear market―the last quarter―that rates will go up the fastest and prices of bonds will fall the most dramatically. So while interest rates are going higher, there's no reason to be panicky about that right now.

Monday, March 13, 2017

I would counsel people not to be a buyer of equities up here. If you’re an owner of equities, I would counsel strongly to bring stops up behind your positions, buy puts to protect those positions, sell futures to protect those positions, or write covered calls to protect those positions. I would tell you not to be a buyer of new equities. And anything that you had in the past, do something to protect those profits.

Trump Effect

Will there be tax cuts as consequential as Mr. Trump has indicated? There'll be tax cuts, but will they be as consequential? Probably not. Will there be infrastructure spending? Not a question. But will there be as much infrastructure spending as the markets seem to anticipate? Probably not.Those things make it difficult to remain bullish of stocks at these levels. The market can go higher, but it is at levels I find to be nosebleed territory. People should be very careful up here. New purchases are to be avoided; old purchases should be hedged up in some fashion using derivatives or options; and bring stop orders up close behind the market.

Tuesday, February 21, 2017

As we have said many times in the past, the “game” of investing is so very like the children's game of “Musical Chairs.” The music is still playing loudly and well; all are dancing and circling the chairs and it seems, for the moment, that the music shall last forever. However, when the music does inevitably stop… and it will… all will suddenly dive for the chairs in the middle of the circle and there shall always be one or two participants who find themselves chair-less. Things then grow ugly. Large profits become smaller and small profits become losses.

Two "hawks" have replaced two "doves" on the FOMC voting panel

Monday, February 13, 2017

STOCKS AROUND THE WORLD CONTINUE TO ADVANCE with nine of the ten markets comprising our International Index having risen since we marked them on Friday. The trend remains upward and although nearly ever method we know of for measuring market sentiment is preposterously over-extended to the upside, and although nearly every method we know of to measure relative value is equally over-extended to the upside, the great game of investment musical chairs continues. The “music” of monetary expansionism continues in Japan and Europe, so clearly that helps even as the policies incumbent in quantitative easing here in the US are farther and farther behind us.The CNN Fear & Greed Index is this morning at 69 and is swiftly approaching “greed” territory once again and purchases of equities at these levels is historically very ill-advised for within weeks… or at the most a few months… those purchases will be proven to have been undertaken at extended, and very high prices. But as happened in the dot com Bubble of near the turn of this century, prices were egregiously, preposterously, stupendously, stupidly over-extended to the upside and then continued to become even more egregiously, preposterously, stupendously and stupidly over-extended for months and months and months. As our old friend, and mentor, Dr. A. Gary Shilling taught us, “The market can remain illogical far longer than you or I can remain solvent.”Illogic reigns; the “Melt Up” has begun in earnest and it will stop when it stops and not a moment before.To get the numbers out of the way, for the year-to-date stocks around the world as measured by our International Index are +3.8% while stocks here in the US, as measured by the S&P are +3.4%. The global leader… at least as far as our Index is concerned… continues to be Brazil, which led to the upside last year and which for the year-to-date is up a stunning 11.0%.Also, once again, amidst the euphoria of the moment, it is worth remembering that stocks in global terms are still well below their highs made in May of ’15 when our International Index traded to 11,185. It does seem that that “peak” wants to be tested at the very least.

In our retirement fund here at TGL… and we’ve a few millions in the fund so it is not an inconsiderable sum and certainly it is meaningful to us… we are long of the shares of the largest steel producing company here in the US; we are long of gold in EUR and Yen denominated terms (having exited our position in gold/US$ late last week, a position established in the shares of the largest gold mining company in North America rather than in GLD or one of the other bullion ETFs.) and we are long of soybeans via the ETF, SOYB.

As of Friday’s close we are up 5.2% for the year-to-date and we are grateful for reasonably well defined trends; for taking small losses and for simply “Doing more of that which is working and less of that which is not.”

Wednesday, February 1, 2017

We were concerned about the stock market when we opened the latest edition of Barron’s and saw the front page cover announcing DOW 30,000! In the past, it has always been magazine and/or newspaper headlines that marked the highs and lows of the equity markets. Hence, when we opened our mail yesterday morning [Ed. Note: We sometimes don’t receive Barron’s in our post-office box until Monday morning; the rest of the world receives it on Saturday. This was one of those days!] and saw the front cover we thought: Has it happened again? Has a nation-wide publication once again marked the highs? Have we learned nothing at all from history?

The jubilation over Dow 20,000 was disturbing enough, but to have had Dow 30,000 touted on the front page of Barron’s revisited historical precedents that spoke very loudly to us. We would very much like to believe that the bull market shall continue and we would very much like to think that Dow 30,000 shall eventually be upon us, and we very, very much would like to believe that any further weakness in stocks is to be bought, but at the moment we have very serious doubts to that effect…. Very, very serious doubts.

Tops of consequence are made in this fashion, with front page articles touting new highs. Attention then must be paid...via zerohedge

Friday, January 27, 2017

The situation in India continues to be problematic. The liquidity that the Modi government had promised following its currency “conversion” scheme has not yet appeared. Eventually the new currency denominations promised by the government will be fully available, but until then India’s citizens are living in a relatively “cashless” environment when “cash” has always been the preferred method of doing day-to-day business.As a result gold buying on the part of India, the most important gold buying nation in the world, has remained subdued at best.In that light, gold has held on quite well and we are left to wonder how strong it shall be when India returns in full regalia?

Monday, January 23, 2017

No one anywhere should be surprised by this weakness for after nearly a month of quietly stronger prices, some correction is to be expected.Many are blaming gold’s weakness upon the comments from Ms. Yellen ... and we shall not discount her comments… or theirs either… but gold was already showing some signs of ‘tiredness’ before Dr. Yellen took the stage.

Bullish Dollar and Gold

Why would we wish to use a currency… the dollar…which we think shall rise in value to buy gold when we can use currencies that we believe shall weaken to do the same thing.

Thursday, January 5, 2017

STOCK PRICES AROUND THE WORLD ARE STRONGER AGAIN as our international Index has risen another 58 “points” or a bit more than 0.5% and although we are suspicious of this continued strength and although we are certain that a correction of some consequence shall happen “of a sudden” and only when it is obviously very least expected, one cannot take an overtly bearish stance for that would be folly. Again we shall simply suggest that this remains a bull market and that in a bull market that one is suspicious of one shall do best by being neutral of equities on balance, and so we are.We are acting as a good “hedged” fund would act, being long of the things we like while being hedged against broad market risk at the same time.Appearing on CNBC’s “Fast Money” last evening we again said that we wish to own the “things that if dropped on your foot shall hurt.” That is, we wish to own the simple things incumbent in economic growth: steel; ball bearings manufacturers; railroads that move “stuff” and the like. This is an old story; but it is nonetheless a very good one. If auto sale are as strong as they are domestically…as noted above… and if they are stronger still in China and Asia, then steel demand shall remain strong. Further, if the Chinese government wishes to crack down upon manufacturers there because of air pollution concerns, steel manufacturing in China may slow, with global demand still remaining rather high and thus forcing steel buyers to the US or perhaps to India. Sometimes, simple makes sense and in this instance, fully hedged “simple” might make the most sense of all.

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